2024 (10) TMI 389 - HC - Money Laundering

Money laundering proceedings continue despite dropping of subsequent disproportionate assets case under PMLA

Ramesh Chandra Singh Versus Assistant Director, Enforcement Directorate, Government of India & Ors.

The Calcutta HC dismissed a petition seeking quashing of money laundering proceedings under the PMLA. The petitioner argued that dropping of a subsequent ... Money Laundering - Application for quashing of proceeding - predicate offences - petitioner had amassed huge amount of wealth, which could not have been from his known source of income - HELD THAT:- In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], the Hon’ble Supreme Court upheld the validity of several salient features of the PML Act. Among other things, it was held there that if a person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him. Admittedly, the present proceeding under the PML Act relates to predicate offences in a case instituted by the CBI, which has not been dropped and/or quashed. It is still pending. It is a different thing that in the said parent case, the petitioner has still been shown as witness. The proposition of law that an accused in a PML Act case need not be an accused in the predicate offences case covers this issue. The proceeding that has been dropped is an independent one that was started against the petitioner on charges, inter alia, of amassing disproportionate assets. This case too was initiated by the CBI. But, the instant PMLA proceeding does not owe its origin to the purported predicate offences contained in such subsequent case started by the CBI. Therefore, the dropping of such subsequent proceeding would hardly have much bearing on the PML Act case started in respect of first case concerning predicate offences. The allegations levelled against the petitioner indeed involve disputed questions of fact that cannot be gone into at this stage. There are no merit in the petitioner’s application for quashing of proceeding. Therefore, the same is dismissed, however without any order as to costs. Issues Involved:1. Quashing of proceedings under the Prevention of Money Laundering Act (PMLA).2. Connection between predicate offences and PMLA proceedings.3. Disproportionate assets and their linkage to money laundering.4. Legal standing of the petitioner in PMLA proceedings despite being a witness in the predicate offence case.Issue-wise Detailed Analysis:1. Quashing of Proceedings under the Prevention of Money Laundering Act (PMLA):The petitioner sought to quash proceedings related to ECIR No. KLZ/16/2017, arguing that there was no basis for the proceedings under the PMLA since they were not accused in the predicate offence case. The petitioner relied on the Supreme Court's judgment in Vijay Madan Lal Choudhary & Ors. vs UOI & Ors., which stated that if the scheduled offences were quashed or resulted in acquittal, the related PMLA proceedings should also be terminated. However, the court noted that the proceedings under the PMLA were distinct and could continue even if the petitioner was not accused in the predicate offence case.2. Connection Between Predicate Offences and PMLA Proceedings:The court emphasized that being a witness in the predicate offence case did not preclude the petitioner from being proceeded against under the PMLA. The PMLA case was based on the premise that the petitioner, despite not being an accused in the CBI's predicate offence case, was implicated in money laundering activities. The court highlighted that the PMLA proceedings were independent and could proceed even if the predicate offence case was not quashed or dropped.3. Disproportionate Assets and Their Linkage to Money Laundering:The petitioner was alleged to have amassed wealth disproportionate to his known sources of income. The Enforcement Directorate claimed the assets were proceeds of crime under the PMLA. The court noted that the CBI had filed a closure report in a separate case concerning disproportionate assets, but this did not affect the PMLA proceedings, which were based on different predicate offences. The court found that the allegations of disproportionate assets involved disputed questions of fact that could not be resolved at this stage.4. Legal Standing of the Petitioner in PMLA Proceedings Despite Being a Witness in the Predicate Offence Case:The court clarified that under the PMLA, one need not be an accused in the predicate offence case to be proceeded against. The court cited the Supreme Court's decision in Pavana Dibbur Vs. Directorate of Enforcement, which held that even if an individual is not accused in the predicate offence, they can still face PMLA charges if there is evidence of money laundering. The court found that there was sufficient material pointing towards the petitioner's involvement in money laundering activities, warranting the continuation of the PMLA proceedings.Conclusion:The court dismissed the petitioner's application for quashing the PMLA proceedings, concluding that the allegations involved complex factual disputes that required examination at trial. The court allowed the petitioner to raise these issues before the trial court at an appropriate stage. The judgment underscored the independence of PMLA proceedings from the predicate offences and the distinct legal framework governing money laundering cases.